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I have a X dollars project under my belt. It supposed to start on Monday. But client refused to go forward and I waited for them for a week. How do software consulting firms deal with this situation?
This is a contract project and the client cannot pay me due to resources. For suppose 80 hours.
From what you've described, it sounds like the best thing to do is move on. The project involved you doing X hours of work for Y units of compensation. Since the project was cancelled before you started, that means you've done X=0 hours of work.
Therefore, it seems justifiable that you would receive Y=0 units of compensation.
If you're a consultant, your ability to make money and generate revenue for yourself most likely depends on not just your technical skill level, but also your level of trust, ability to network and form personal relationships, and your ability to understand that the loss of one opportunity could segue into another opportunity.
You could push the issue and try to get some portion of your 80 hours, but at what loss? Is this person going to want to do business with someone who is inflexible when they need flexibility? Are they going to refer you to a partner or other business in need of services? Will you be spending time and energy on something that isn't lucrative when you could be spending that energy networking and searching for other opportunities?
Keep in mind that the main reason businesses hire contractors is for the same reason contractors love being contractors: Flexibility.
You did not say whether you are part of a "larger" company that can absorb such a loss or if you are independent and you brought on help for a week. If the latter, 40 hours of compensation for the guy you hired and your fee are pretty significant to absorb. If you have a contract in place, fully executed, then you may want to consider action on this. Consult an attorney and see what your options are. You have to weigh the risk between winning and getting your loss back plus legal fees to losing that plus legal fees and the probability of falling somewhere in between.
The attorney might just say walk away but I think you are well justified in researching this avenue.
Either way, this is a HUGE lessons learned for you. Before we do business, we conduct a credit check on our potential clients to ensure they have the resources to pay and a history of satisfying its debts. If you are able to do that, do it. If not, you may consider pulling in a retainer before work starts, that being a part of the contract. It may make you a bit less competitive or attractive to some customers, but if the customers don't pay, the business was not worth anything anyway.
Good luck.
These are the kind of lessons to learn early, and it sounds like you've learned it for a relatively small amount of money (cheap price for a great lesson). I know people who have had this happen on 6-7 figure projects. It can really suck.
Because of this type of situation we have two steps that must be completed in order for a project to be considered officially ordered:
Only once both those steps have been completed do we move forwards.
It's easy for a client to sign a contract, but making a payment is less so. We could theoretically go after clients who sign a contract, committing to the relationship and payments, but never move forwards. But that's a hassle so we assume a contract isn't the real deal until payment comes through.
